Productivity Growth, Technological Progress, and Efficiency Change in Vietnamese Manufacturing Industries: A Stochastic Frontier Approach

Nguyen Khac Minh, Pham Van Khanh, Nguyen Thi Minh, Nguyen Thi Phuong Anh

Faculty of Economics, Water Resources University, Hanoi, Vietnam.
Hanoi University of Science and Technology, Hanoi, Vietnam.
Military Technical Academy, Hanoi, Vietnam.
National Economics University, Hanoi, Vietnam.

DOI: 10.4236/ojs.2012.22028                

Abstract

This study applies a stochastic frontier production approach to decompose the sources of total productivity (TFP) growth into technical progress and changes in technical efficiency of 8057 firms in Vietnamese manufacturing industries during 2003-2007. Using both total manufacturing industry and sub-manufacturing industrial regressions, the analysis focuses on the trend of technological progress (TP) and technical efficiency change (TEC), and the role of productivity change in economic growth. According to the estimated results, the annual technical progress for the manufacturing industry and sub-manufacturing industries are calculated directly from the estimated parameters of the translog stochastic frontier production function by taking a partial derivative of output with respect to time t. The average technical changes in manufacturing industry and sub-manufacturing industries are positive, with an average technical change about 5.2%, 5.8%, 5.4%, 11.8%, 4.6%, 4.1%, 7.3%, 4.8%, 4.8% and 4.8% for total sample, food products & beverages, textile & wearing apparel, footwear, paper & products, industrial chemicals, rubber & plastic products, non- metallic mineral, basic & fabricated metal and other sub-industries, respectively. Total TFP in the manufacturing sector has grown at the annual rate of 0.052, although the rate of growth decreased continuously during the sample period. For the sub-industry estimates during the sample period, TFP grew fastest in the footwear sub-industry, with annual average growth rate of 11.8%, followed by the rubber & plastic products with a rate of 7.3%, and the food products & beverages with a rate of 5.8% per annum.

Keywords

Total Factor Productivity; Technical Efficiency Change; Technological Progress; Stochastic Frontier Approach; Vietnamese Manufacturing Industry

Conflicts of Interest

The authors declare no conflicts of interest.

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